Thursday 24 April 2014 13.34 EDT
First published on Thursday 24 April 2014 13.34 EDT

Britain's economic recovery appears to be well under way but, with growth apparently secured and the outlook bright, the focus has shifted to the nature of the recovery.

It is the received wisdom that in the runup to the financial crisis that hit in 2008, the UK economy was too heavily dependent on credit-fuelled consumer spending and on financial services. A shift towards more manufacturing and exports is required if a sustainable economic future is to be built.

The International Monetary Fund (IMF) said earlier this month that it expects the UK economy to grow at a faster pace than its G7 peers and its verdict came amid a raft of positive data in recent weeks.

While with one breath George Osborne welcomed the IMF's flattering conclusion, with the next he stressed the job was not yet done and more work was needed "to get our exports and investment going".

It confirms a lot of what we already knew about the decline of Britain's industrial base over the past 60 years, but puts it in to a broader context: it is part of shrinking industry in the wider G7.

It also highlights the scale of the rebalancing challenge ahead, with Britain spending the least on investment of all G7 economies, and much more reliant on financial services than its peers.

Here are the key points.

1. There has been a marked postwar shift in economic power from manufacturing to services. In 1948, British industry (including manufacturing, oil and gas extraction, and utilities) accounted for 41% of the British economy. By 2013, it was just 14%.

At the same time the services sector's share of the economy has risen from 46% to 79%. Construction, meanwhile, has remained stable at about 6% of GDP, and the role of agriculture has dwindledfrom 6% to 1% over the postwar years.

2. The changing makeup of the UK economy is roughly in line with other major economies (but manufacturing has declined most rapidly in the UK). All G7 economies (UK, US, Canada, Germany, France, Italy and Japan) have seen roughly the same change in composition as the UK, with a gradual decline in production and manufacturing as a proportion of GDP. The UK and France are at the bottom of the pack, with just 10% of their economies attributable to manufacturing. Germany comes out on top at 22%, followed by Japan at 19%.

"The UK manufacturing industry has declined at the fastest pace of the G7 economies; resulting in the UK moving from having one of the largest shares in 1948 to the lowest in 2012," the ONS notes.

3. Britain's financial services sector grew rapidly between 2006 and 2009. The UK economy has long been a dominant player in financial services, along with the US, but growth in the sector between 2006 and 2009 was particularly rapid. By 2009, the sector accounted for 10% of UK GDP, the highest of all G7 economies. The second highest was Canada at 6.7%, and the lowest was Germany at 3.9%. The dominance of the sector in Britain meant it was hit harder by the financial crash. Its share of the economy fell by 2.9 percentage points, while it remained roughly stable in other major economies. Output in the UK financial services sector is still 13.6% below pre-crisis levels according to the latest ONS data.

4. Financial services are a key part of UK exports. Britain has the highest ratio of services exports to GDP in the G7, at 13%. It also has the biggest share of financial services exports by some way, at 29% in 2012. The second is the US at 15%, with Japan exporting the least at 3%.

5. Britain's export performance improved during the downturn and subsequent recovery. Net trade – exports minus imports – was a drag on UK growth between 1997 and 2007, but that trend was reversed during the downturn and subsequently as the economy recovers, partly as a sharp fall in the pound between 2007 and 2009 made UK goods cheaper abroad.

6. Britain spends less on investment than any other G7 economy. The UK spent 15% of GDP on investment in 2013, just behind Germany and Italy (in 2012) on 17% while at the opposite end of the scale France spent 25% and Canada 22%.

"The UK economy is yet to see the strong recovery in fixed investment that is necessary for sustained GDP growth – with the level of investment 16.2% lower in 2013 when compared with 2008," the ONS notes.

7. UK household spending suffered the biggest fall in the G7 in 2008-09. Household spending in Britain fell 5.7% between the first quarter of 2008 and the third quarter of 2009. The ONS challenges the assumption that the UK recovery has been particularly reliant on consumer spending.

"Despite it being widely reported that the UK economic recovery has been dominated by household consumption, the sector only recovered the output lost in the economic downturn in 2013, while all other G7 economies, with the exception of Italy, passed this milestone much earlier."

Household spending has picked up over the last year, however, rising 2.2% between the fourth quarter of 2012 and the fourth quarter of 2013.